Tough love with your money - The Explorer: Business

Tough love with your money

'Bout Your Bucks

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Posted: Tuesday, April 13, 2010 11:00 pm | Updated: 8:14 am, Thu Mar 24, 2011.

In the introduction to 'Bout Your Bucks, we talked about you becoming your own investment adviser.

Reviewing your investments, you may see that when the Dow Jones Industrial Average or Dow was going up, you made money, and when the Dow was going down … well, you get my point. Did your stockbroker let that happen? Let's have a little talk about brokers, you and the money.

You noticed I called it the money, not your money. Put yourself on one side of a table and the broker on the other.

Let's stop here. "But I have a certified financial planner," you say. A certified financial planner is a fancy name for a broker. They both charge commissions and admin fees.

So, you are looking across the table at the broker and in the middle is the money. Now, take the money and push it across the table to the broker's side and get up and walk away. You've decided to let the broker manage it for you because up until now, the money has been sitting there waiting for someone to pay attention to it. And you're confident the broker, who knows all about investing, must have your best interest at heart.

Ask yourself this. Have I spent more time looking for the perfect pitching wedge than managing my money? A 10-minute phone call to the broker once a quarter is not money management. Keeping in touch may be quaint, but in touch with what – the broker or the money? Call this tough love with your money, but who should have more interest in your money than you?

Letting someone manage your money for you is always at your expense. When you buy and sell a stock through a broker, you pay a commission on both trades. Always consider the commissions a loss and build them into your investment planning.

However, there are ways to avoid these costs. The time will come when you can serve as your own guide, save the commissions and fees, and feel comfortable about it. Your primary goal is the preservation of wealth. Never let money slip away from you. Never let someone else make the decisions on what to do with your money. You will learn how to take the fear out of the decision-making process.

We will set up some parameters to give you the discipline you need to make the tough choices. When the success comes, so will confidence in your decisions.

Now you're getting started. Does that loud guy on the business channel make appropriate stock picks? Find out next time. 'Til then.

 

 

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